Principles Of Auditing & Other Assurance Services
21st Edition
ISBN: 9781259916984
Author: WHITTINGTON, Ray, Pany, Kurt
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Question
Chapter 13, Problem 14RQ
To determine
Explain substantive procedures that should be considered for the verification of the property and equipment that are not generally applicable.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Diamond Medical Company manufactures nose mask and hand sanitizer. Its main customers are retailers who then sell to the general public. The company’s manufacturing is spread across five sites and goods are stored in its nine warehouses located across the country. You are an audit supervisor of Reynolds & Associate and in preparation for the forthcoming audit for the year ending 30 June 2019, you are reviewing the following notes your audit manager has provided you with in relation to the company’s internal controls.Diamond Medical Company has a small internal audit (IA) department. During the year, IA started a program of physically verifying the company’s assets and comparing the results to the non-current assets register, as this type of reconciliation had not occurred for some time. To date only 15% of assets have had their existence confirmed as IA has experienced significant staff shortages and several members of the current IA team are new to Diamond Medical Company.During…
Diamond Medical Company manufactures nose mask and hand sanitizer. Its main customers are retailers who then sell to the general public. The company’s manufacturing is spread across five sites and goods are stored in its nine warehouses located across the country. You are an audit supervisor of Reynolds & Associate and in preparation for the forthcomingaudit for the year ending 30 June 2019, you are reviewing the following notes your audit manager has provided you with in relation to the company’s internal controls. Diamond Medical Company has a small internal audit (IA) department. During the year, IA started a program of physically verifying the company’s assets and comparing the results to thenon-current assets register, as this type of reconciliation had not occurred for some time. To date only 15% of assets have had their existence confirmed as IA has experienced significant staff shortages and several members of the current IA team are new to Diamond Medical Company. During…
Diamond Medical Company manufactures nose maskand hand sanitizer. Its main customers are retailers who then sell to the general public. The company’s manufacturing is spread across five sites and goods are stored in its nine warehouses located across the country. You are an audit supervisor of Reynolds& Associateand in preparation for the forthcoming audit for the year ending 30 June 2019, you are reviewing the following notes your audit manager has provided you with in relation to the company’s internal controls. Diamond Medical Company has a small internal audit (IA) department. During the year, IA started a program of physically verifying the company’s assets and comparing the results to the non-current assets register, as this type of reconciliation had not occurred for some time. To date only 15% of assets have had their existence confirmed as IA has experienced significant staff shortages and several members of the current IA team are new to Diamond Medical Company. During…
Chapter 13 Solutions
Principles Of Auditing & Other Assurance Services
Ch. 13 - Prob. 1RQCh. 13 - K-J Corporation has current assets of 5 million...Ch. 13 - Prob. 3RQCh. 13 - Prob. 4RQCh. 13 - Explain the use of a system of authorizations for...Ch. 13 - Moultrie Company discovered recently that a number...Ch. 13 - Does a failure to record the retirement of...Ch. 13 - Prob. 8RQCh. 13 - Prob. 9RQCh. 13 - Prob. 10RQ
Ch. 13 - Prob. 11RQCh. 13 - Prob. 12RQCh. 13 - Prob. 13RQCh. 13 - Prob. 14RQCh. 13 - Prob. 15RQCh. 13 - Gibson Manufacturing Company acquired new factory...Ch. 13 - Prob. 17RQCh. 13 - Do the auditors question the service lives adopted...Ch. 13 - Prob. 19RQCh. 13 - Explain how the existence of lease agreements may...Ch. 13 - Prob. 21RQCh. 13 - Prob. 22QRACh. 13 - Prob. 23QRACh. 13 - Gruen Corporation is a large diversified company...Ch. 13 - Prob. 25QRACh. 13 - Prob. 26QRACh. 13 - Prob. 27QRACh. 13 - Prob. 28QRACh. 13 - Prob. 29QRACh. 13 - Prob. 30QRACh. 13 - Prob. 31QRACh. 13 - To assure accountability for fixed-asset...Ch. 13 - Prob. 32BOQCh. 13 - Which of the following is an internal control...Ch. 13 - Which of the following accounts should be reviewed...Ch. 13 - Prob. 32EOQCh. 13 - Prob. 32FOQCh. 13 - Which of the following statements is not typical...Ch. 13 - Prob. 32HOQCh. 13 - Prob. 32IOQCh. 13 - An effective procedure for identifying unrecorded...Ch. 13 - Which of the following is not an overall test of...Ch. 13 - Prob. 32LOQCh. 13 - Prob. 33OQCh. 13 - Analysis of which account is least likely to...Ch. 13 - Prob. 34BOQCh. 13 - Prob. 34COQCh. 13 - Prob. 34DOQCh. 13 - A search for overstated property, plant, and...Ch. 13 - The following are typical questions that might...Ch. 13 - Prob. 36PCh. 13 - Prob. 37PCh. 13 - Chem-Lite, Inc., maintains its accounts on the...Ch. 13 - Prob. 39PCh. 13 - You are reviewing the property, plant, and...
Knowledge Booster
Similar questions
- Diamond Medical Company manufactures nose mask and hand sanitizer. Its main customers are retailers who then sell to the general public. The company’s manufacturing is spread across five sites and goods are stored in its nine warehouses located across the country. You are an audit supervisor of Reynolds & Associate and in preparation for the forthcoming audit for the year ending 30 June 2019, you are reviewing the following notes your audit manager has provided you with in relation to the company’s internal controls.Diamond Medical Company has a small internal audit (IA) department. During the year, IA started a program of physically verifying the company’s assets and comparing the results to the non-current assets register, as this type of reconciliation had not occurred for some time. To date only 15% of assets have had their existence confirmed as IA has experienced significant staff shortages and several members of the current IA team are new to Diamond Medical Company.During…arrow_forwardTuchel International Co (Tuchel) is a manufacturer of electrical equipment. It has factories across the country and its customer base includes retailers as well as individuals, to whom direct sales are made through theirwebsite. The company’s year-end is 30 September 2021. You are an audit supervisor of Zinidine & Co and are currently reviewing documentation of Tuchel’s internal control in preparation for the interim audit. Tuchel’s website allows individuals to order goods directly, and full payment is taken in advance. Currently the website is not integrated into the inventory system and inventory levels are not checked at the time when ordersare placed. Inventory is valued at the lower of cost and net realizable value.Goods are dispatched via local couriers; however, they do not always record customer signatures as proof that the customer has received the goods. Over the past 12 months there have been customer complaints about the delay between sales orders and receipt of goods.…arrow_forwardIn order to form an audit opinion, auditors must obtain sufficient appropriate audit evidence. ISA 500 identifies the types of auditing procedures that an auditor might carry out in order to obtain audit evidence. The auditor is planning for the audit of a We can LLC, assembles specialist motor vehicles for industrial purposes such as earth movers and trucks. The total assets of the business are OMR 150 Million. The company owns four assembly plants to which parts are delivered and assembled into the motor vehicles. The auditor believes that the financial statements are at risk of material misstatement but as the part of his audit engagement an auditor wishes to: 1. Test the plant and equipment recorded in the financial statements of the We can LLC does exist in all four assemble plants. 2. Test the Sales transaction have been recorded in the financial statements at appropriate amount. 3. Test the cash balance has been included in the financial statements at appropriate amount. 4. Test…arrow_forward
- Please solve all questions. You are the manager responsible for the audit of Kicap Manis Berhad, a listed company, for the year ended 31 December 2019. The main business activity of Kicap Manis Berhad is the manufacture of farm machinery. The audit work has been completed, and you are reviewing the working papers in order to draft a report to those charged with governance. During the audit of property, plant and equipment (PPE), the audit team found no material misstatement but the following issues have come to your attention. It was discovered that authorization had not been gained for the purchase of office equipment with a cost of RM315,000. The officer in charge of the purchase claimed that the management has conveyed their agreement with the purchase in the management team monthly meeting, but the audit team has not been furnished with such minutes of meeting even after numerous requests. The client is using an internally developed PPE system, PropertyCare, to maintain the…arrow_forwardA government entity collects fees for the processing of certain permits. The processing of a permit would normally take a few minutes. The processing fee is collected upon issuance of the permit. This government entity would normally recognize revenue from permit fees. On a straight-line basis By reference to the stage of completion Upon collection of the fee When the significant risks and rewards are transferred to the customer The receipt of a performance bond or a security deposit id credited to a Liability account Revenue account Cash account a and c A certification on the availability of allotment is required before a disbursement of government funds is made. According to the GAM for NGAs, who shall issue this certification? Budget officer Chief accountant Head of the agency Requisitioning Individual The chief accountant shall charge obligations incurred against available allotment to ensure that The NCA is sufficient to meet the disbursement made There are no unreleased…arrow_forwardDuties of controller as defined by the controllers institute of U.S.A? Ans: 1.The installation and supervision of all accounting records. 2.The preparation and interpretation of financial reports and statements. 3.The continuous audit of accounts and records. 4.The compilation of production and distribution costs. 5.The taking and costing of all physical inventories 6.The maintenance of adequate records of all contacts and leases. 7.The approval for payment of all cheques, promissory notes etsarrow_forward
- Raymack Manufacturing, headquartered in Michigan, is a manufacturer of equipment component parts used in a number of industries. The company’s financial statements and related footnotes contain the required segment reporting. The financial statements are being analyzed by a bank lending officer to whom you report. The officer has asked you to respond to each of the following questions regarding segment reporting with a brief memo.1. Two of Raymack’s reportable segments deal with components for fluid movement machinery. One of the segments designs and installs manufactured components, and the other segment inspects, maintains, and repairs the installed components. Why might these activities constitute two separate operating segments, when in fact they both have to do with components for fluid movement machinery?2. The total net sales for all reportable and nonreportable segments is $789 million. After reducing reported consolidated revenues for any items that might relate to items not…arrow_forwardYou are required to obtain the annual reports of two ASX Top 200 companies in the sameindustry and write a business research report to address the following questions related to theitems included in property, plant and equipment.1. Review and evaluate the PPE disclosure of your selected companies which may include:• What range of measures is used to determine amounts for these items in the reports ofthe individual companies?• Do you think it is valid to add the items, given the measures used?• How would you interpret the total amount for property, plant and equipment in thefinancial statements?• Compare the measures used by the different companies for similar items. Are there anyinconsistencies in how similar items are measured by the different companies?2. Discuss the factors that accountants should consider when setting up company accountingpolicy relating to PPE.3. Detail your view on the subsequent measurement of PPE and provide recommendations toaccounting standard setters.arrow_forwardLamar LLC is in the process of updating its revenues and receivables systems with the implementation of new accounting software. James Loden, Inc. is an independent information technology consultant who is assisting Tamar with the project. James has developed the following checklist containing internal control points that the company should consider in this new implementation: Is it appropriate to program the system for general authorization of certain sales, within given limits?arrow_forward
- Oman United Engineering Services LLC (OUES) is one of the largest, multi-disciplined engineering, contracting and construction company in the Sultanate of Oman.Assume that you are an Internal Auditor of the Company and answer the following questions.a) Discuss the areas covered under the internal audit? b) Explain the procedures to be followed by you in conducting internal audit? c) What value does the Internal Audit Provide to the Company? Expain.arrow_forwardYou are auditing a client that supplies electrical products to retail stores and electrical contractors throughout the country.The client keeps its accounts receivable records on a computer system, which is updated at the end of each business day.You plan to audit accounts receivable balance as at the end of the financial year, and you have a generalised audit software (GAS) package available to help in this task.Required:Identify ten (10) substantive audit procedures that you could perform using generalised audit software (GAS) in relation to auditing the accounts receivable account.arrow_forwardRandall, Inc. is a private company that manufactures heavy machinery. The company has an active audit committee and board of directors. The audit committee consists of two outside directors and Howard Kress, the company chief financial officer. The audit committee meets quarterly to provide oversight of financial reporting, including reviewing new accounting policies and unusual transactions. Howard Kress personally reviews and approves any related party transactions. Internal audit of operating units are performed by the internal auditor, who reports directly to Laura Howe, the chief operating officer. The company has written code of conduct and employees agree to adhere to the code when they are hired. The company also has a hotline for confidential reporting of unethical behavior that is staffed by the corporate controller. The audit committee reviews summaries of all incidents and investigations performed. Required: Identify the weaknesses in Randall’s system of corporate…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,Business Its Legal Ethical & Global EnvironmentAccountingISBN:9781305224414Author:JENNINGSPublisher:CengageCornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Business Its Legal Ethical & Global Environment
Accounting
ISBN:9781305224414
Author:JENNINGS
Publisher:Cengage
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning